Day 1 Best practices in the Region

Economical, Technological and Environmental Impact Assessment of National Regulations
and Incentives for Renewable Energy and Energy Efficiency
A project financed by the Ministry of Foreign Affairs of Denmark

RE & EE National Policies Evaluation Workshop
Cairo, December 19 – 20, 2010

Best Practices in the Region

Page 1 Cairo – RE & EE Policy Evaluation December 19 - 20, 2010


Overview of the presentation

• Policy cycle
• Classification of EE and RE technologies
• Reliance on the market mechanism
• RE & EE Policy Instruments
• Benchmarking
• RE Policy Instruments
• EE Policy Instruments



Policy cycle

Foresight formulate Evidence

reformulate Theory Implement

Model

Indicators

evaluate monitor



Definition of RE & EE Technologies

What are RE & EE Technologies ?
• They reduce negative environmental impacts of industrial activities
• Are using local ressources and reduce the use of fossil energies
• They create economic branches in the fields of environmental
technologies

• … and to generally base economic growth on the concept of
sustainability and

RENEWABLE ENERGIES (RE) and
ENERGY EFFICIENCY (EE)
are major elements of a green sustainable economy !



Classification of RE & EE Technologies by Policy Instruments

Energy efficiency technologies (EE):
• Owner is user and operator
• High number of application at the user side
• High number of market actors

Renewable energy technologies (RE):
• Owner is not user
• Stand-alone investment
• Energy produced is sold in the energy market
• High capital requirements

Mixed situation:
• Direct use of RE at the user level (Solar energy, biomass)
• Energy service companies



Reliance on the Market Mechanism

Guiding principle market based energy policy:

• Energy user decision
• Energy user knows best what to do
• Market participants have full information
• Energy prices are leading to the correct decisions at the energy
user side
• Energy prices are reflecting the social opportunity costs for the
country (value for the country)
• Market mechanism will solve demand-supply balances
• Market perticipants anticipate future developments
• Markets are reacting fast and without frictions
• Markets promote innovations (Energy service companies –
ESCOs)



RE & EE Policy Instruments

• Similarity in the targets and instruments used in different countries
• Wide range of implementing modalities and generally somewhat
different emphasis
• Systematic comparison is difficult

General classification
• “Enabling measures”
– Create the institutional and legal basis for intervention
• “Specific instruments”
– Intervention that change behaviour of market participants



Benchmarking

• The energy situation is in each RCREEE country different
– Priorities and their perception
• Judgement is based on individual reports for each country that describe in
detail the instruments in place, their content and the experience of their
implementation
• Judgements are those of the consulting team and are not necessarily
endorsed by RCREEE.

We have tried to maintain consistency among the interpretation of the criteria in
each country - positive and negative “smileys”
Each of three consecutive steps in the policy phase.
1. Whether work has begun on the matter
2. Instrument is operational
3. positive impacts have been obtained



RE Policy Instruments

• Enabling measures
– Strategy and targets
– Legal reform
– RE Agency

• Instruments
– Financial incentives (capital support)
– Financial incentives (operating support)
– CDM finance
– Standards and labels
– Dissemination of information
– Industrial policy



RE - Strategy and targets

• A renewable energy strategy seta out objectives and targets, definae the combinations
of policy instruments that are expected to achieve the targets, identify the necessary
resources and indicate how they will be provided. It is an essential first step in any
rationale planning of renewable energy investments.
• There has been much activity in this respect in the RCREEE countries.
ALG A target has been established that the contribution of renewable energy (including 
cogeneration) in the primary supply of energy should reach 6% by 2015. This
appears to be an internal target of the Ministry that has not been adopted by
government as a whole.
EGY The Supreme Council of Energy in February 2008 approved a plan to satisfy 20% 
of the generated electricity from renewable energy by 2020, including a 12%
contribution from wind energy.
LIB The Renewable Energy Authority of Libya or REAOL has established a target of 
25% renewable energy by 2025 , but this has not been approved by the Cabinet.
Intermediate targets are 6% by 2015 and 10% by 2020.
MOR The strategy for the energy sector published in March 2008 contains specific 
targets for renewable energy. It is intended that renewable energy will account for
8% of primary energy supply by 2012 and18% of the supply of electricity.
SYR The National Energy Research Centre is now renewing and extending an existing 
plan to 2030. Tentative targets for the end of this period are: 1000 – 1500 MW of
wind power; 250MW of Biomass based plant; 250 MW of photovoltaic plant; 1
MTOE per annum of solar heat.
TUN Tunisia has a clearly stated strategy for renewable energy contained within the 
quadrennial plan running from 2008 to 2011. The targets of the programme are to
increase the share of renewable energy in primary energy consumption (excluding
biomass and hydroelectricity) to 4% by 2011; if biomass and hydroelectricity are
included then the proportion of total primary energy supply would be 13%.


RE – Legal reform

• Responsibilities within government, to create a specialised agency for implementation of
policy and to identify some mechanism to channel subsidy to the investments
• Subsidy may be in the form of a contribution to the capital cost or as a performance
based incentive paid through an artificially high price for electricity.
• The elevated price can be defined either through a negotiated power purchase
agreement or through a feed-in tariff.

ALG There is legal provision for direct subsidies to renewable energy, but also for
preferential rates for electricity generated from renewable energies. The
connection costs of related facilities are to be borne by the company that exploits

the transport and/or distribution network.
EGY There is no renewable energy law, but there are some important provisions of the
draft electricity law that will determine how renewable development proceeds. The
Law sets out the procedures for the construction of grid-connected renewable 
generators and the compensation of EETC for purchases of power at higher prices
than alternatives.
JOR A law for the promotion of renewable energy has recently been adopted to support
achievement of the targets in the Energy Strategy. The new legislation allows
developers to negotiate directly with MEMR on price and establishment of projects. 
Renewable energy projects will be required to clearly state fixed electricity tariffs in
their proposals before being approved.
LEB The electricity industry operates in a legal vacuum; a modern law is in principle in
force, but has never actually been implemented; it has no articles on renewable
energy. There is a draft of a Law for the Promotion of Renewable Energy, but the 
absence of any government strategy makes it almost impossible to propose legal
form.
MOR Several laws bear on renewable energy, but they are limited in scope. There is no
Page 11 Cairo –comprehensive renewable energy law.
RE & EE Policy Evaluation December 19 - 20, 2010 


RE – Agency

• Research, prepare initiatives, draft regulations, monitor progress, ensure compliance,
• administer funds and perform other administrative activities
• promoting renewable technologies.
• There may be conflicts of interest that arise and it may be necessary to shift roles.

ALG Responsibility for various aspects of the promotion of renewable energy is
dispersed within the Ministry, APRUE, CREDEG in Sonelgaz, the High Commission
for Development of the Steppe, The Centre for the Development of Renewable
Energies. (CDER), The Unit for the Development of Solar Equipment, (UDES), The

Unit for the Development of Silicon Technology. Am ore focused effort maight be
more effective.
EGY The New and Renewable Energy Authority (NREA) was founded in 1986 as a
research institute and it has been successful in promoting development of
renewable sources of energy. There are now some conflicts in its acquired roles for

development, regulation and research.
LIB The Renewable Energy Authority of Libya (REAOL) has duties: to implement
projects based on renewable energy; to raise the contribution to 10% by 2020; to
encourage industries related to renewable energies; to propose legislation and

regulations.
TUN The Agence Nationale pour la Maitrise de 'l'Energie (ANME) has responsibility for
renewable energy. It has a wide scope and is well-resourced.




EE Policy Instruments

• Enabling measures
– Strategy and targets
– Legal reform – energy efficiency law
– Economic pricing
– Energy Efficiency Agency

• Instruments
– Standards and labels
– Financial incentives
– Energy efficiency obligations
– Audits and support for energy service companies (ESCOs)
– Transport and spatial planning
– Dissemination of information



EE – Strategy and targets

• Strategy sets out objectives and targets and defines the combinations of policy instruments that are
expected to achieve the targets
• Direction of change and the ambitions of government over the long-term and provides guidance as to
the type and extent of intervention and the resources that will be needed
– In Egypt it is 20% by 2022, in Jordan by 2020
– Tunisia expects to reduce energy consumption by 20% from 2004-2011
– Morocco has a less ambitious target of 15% by 2030
• Work has started in Algeria, Jordan. Lebanon, Syria and Yemen

EGY An 8.3% national energy savings target by the year 2022 has been set,
corresponding to 20% of the 2007/2008 energy consumption. An energy efficiency
unit in the cabinet of ministers has been established to coordinate energy efficiency

activities.
MOR A published strategy sets targets for energy efficiency of a 12% reduction in energy
use by 2020 and a 15% reduction by 2030. These percentages are related to the
expected energy demand at those dates in the absence of the energy efficiency

initiatives.
TUN The present strategy for energy efficiency is the quadrennial plan from 2008 to
2011. The objective is to reduce the energy intensity of the economy by 3% each 
year from 2008 - 2011.



Legal reform – Energy efficiency law

• An energy efficiency law that justifies the purpose of the activity
• Establishes a clear focus in government,
• Assigns the responsibilities of actors, and makes provision for an agency and specific instruments
• Identifying and communicating in a policy document or national plan the principles of energy
efficiency policy
• Identifying through technical analysis the potential for saving and prioritizing the sectors with highest
potential
• Defining policy interventions to promote energy efficiency e.g. fiscal and financial incentives, tradable
certificates, and regulations

ALG In general, the legal and judicial framework is consistent and comprehensive; it
covers all aspects of regulating, funding and implementing efficiency policy.

SYR The Energy Conservation Law was issued in February 2009. The law requires that
specified entities must establish an energy conservation unit headed by an Energy
Liaison Officer. The officer has extensive duties to report and implement particular

investments and operational changes.
TUN There is a substantial body of law governing EE, including provisions for: obligatory
audits; consultation over large projects; ESCOs; cogeneration; labelling of
materials, appliances and equipment, regulation of the thermal performance of

buildings, testing of car motors, transport planning.



EE – Economic pricing

• In developing countries this may be the most important market failure
• Where energy companies, mainly gas and electricity, are owned by the state, prices may be
controlled to levels well below marginal costs
• Rational and optimal decisions by investors are therefore not rational and optimal decisions for the
community
• Only two countries have prices that largely reflect costs
• Most countries have high levels of subsidy, especially to electricity, diesel and LPG
• Work has started in Lebanon. Morocco and Tunisia

JOR Until 2003, energy prices were low, sustained by concessionary oil from
Iraq. There are now no subsidies; petroleum products are sold at
international prices plus a tax, except LPG for households which receives
consumer subsidies from the government. Electricity is not subsidised 
overall, but there are cross-subsidies in favour of rural areas, water
pumping, street lighting and low-income households. The highest and lowest
residential prices are 3.1 and 10.6 euro cents/kWh.
PAL Electricity prices in Palestine are very high because almost all energy is
imported from Israel at a relatively high cost and then taxed by the
Palestinian Authority. The average selling price of electricity is 13 euro cents 
/kWh. Consumer tariffs are flat, i.e. the amount per unit is not affected by the
level of consumption.



EE – Energy efficiency agency

• Designing short-term and long-term energy efficiency programmes
• Targeted information to specific categories of users, organising training; liaison with universities and
professional bodies
• Developing energy efficiency standards, conducting or managing programmes of certification and
labelling
• Conduct of surveys; analysis of data and maintenance of database
• An many other interventions ---

JOR The National Energy Research Centre (NERC) was established in 1998 with the
objective inter alia to promote efficient energy. The National Agenda and the Law
for the Promotion of Renewable Energy has attributed new responsibilities to

NERC.
MOR The responsibilities of the Centre for the Development of Renewable Energy will
be extended to cover energy efficiency. The Centre is now in the process of
reorganisation as the Agency for the Development of Renewable Energy and

Energy Efficiency (ADEREE).
SYR The National Energy Research Centre (NERC) was created in mid 2003; it has
many duties under the energy efficiency law. This may require some reorientation 
of NERC’s activities and a review of its internal priorities.
TUN An agency for both of EE and RE was created in 1986 under the Ministry of
Industry and Energy



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